Sink or Swim
On Monday, September 15th 2008, “Crisis on Wall Street as Lehman totters, Merrill is sold, AIG seeks to raise cash” splashes across the newspaper headlines throughout the country. Panic immediately sets in as the looming stock market threatens to crash. As the housing bubble bursts, people are unable to pay back their mortgages. Businesses fail and jobs are lost; the unemployment rate jumps to a terrifying ten percent in October of 2009 (databases). The government prevented a second Great Depression by implementing and investing in programs such as Fannie Mae and Freddie Mac, creating TARP, and helping programs and individuals through the actions of the Federal Reserve. Although the United States government was faced with many difficult and controversial decisions, they responded to the financial crisis of 2008/2009 appropriately with the stability of the future of our nation as their first priority. In September 2008, the U.S Treasury Department took over Fannie Mae, Federal National Mortgage association, and Freddy Mac, Federal home loan Mortgage Corporation, in hopes to control mortgage rates and stimulate the failing economy. The conservation ship action has been described as "one of the most sweeping government interventions in private financial markets in decades," and one that "could turn into the biggest and costliest government bailout ever of private companies" (Federal Takeover). Many argue that we should have let Fannie Mae and Freddie Mac fail because of their fiscal irresponsibility due to no ”due diligence”, their lack of oversight, and the corrupt qualities of their programs. However, if the United States government had allowed Fanny Mae and Freddy Mac to go under, our nation would have lost the money that was poured into the program, an initial $200 billion. More importantly, the housing market would have taken an enormous hit. Without the help of the programs, new loans would be impossible for citizens without a...
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